KCP&L wins a 9 percent revenue increase in Kansas

Kansas City Power & Light’s Kansas customers will see their bills go up again starting Oct. 1 after regulators on Thursday approved a 9.1 percent increase in the utility’s annual revenue.

The increase, which the utility estimates will cost the average residential customer $7.73 a month, will be the seventh in the past decade to hit KCP&L’s 250,000 Kansas customers. Had the utility received the full 12.5 percent revenue increase it asked for, it had estimated the average monthly bill would go up $12.

Although the previous increases amounted to an almost 50 percent rise in electric bills, consumer representative David Springe said the ruling was “pretty good for consumers, broadly speaking.”

The increase approved by the Kansas Corporation Commission amounts to $48.6 million in revenue versus the $67.3 million KCP&L requested. The ruling includes an increase, from the current $10.71 to $14, in the flat monthly fee every residential customer pays. The utility had asked to increase it to $19.

The money will help pay for upgrades at the Wolf Creek nuclear plant and a $1.2 billion pollution control retrofit of its La Cygne coal-fired generating plant. The main parties in the case, including the Citizens’ Utility Ratepayer Board, which Springe heads, had agreed on how those costs should be covered.

Where the regulators knocked down KCP&L’s request was on how much profit the utility could make and use to reward its shareholders. KCP&L had asked to be allowed a 10.3 percent return on equity but got 9.3 percent instead. That’s in line with what the state’s biggest electric utility, Westar, won in its recent rate case. Westar and KCP&L are partners in La Cygne and Wolf Creek.

Chuck Caisley, KCP&L’s vice president for marketing and public affairs, said the utility viewed the ruling as a positive overall that “recognized the investment and upgrade at La Cygne and Wolf Creek and deemed them prudent and done well.”

“If there’s one concern, it’s that the return on equity is at the low end of the national average … one of the lowest in the country” for utilities like KCP&L, he said. “A lot of our investors are large institutions such as pension funds. And if they can get a 9.5 to 9.8 percent return with similar risk from other utilities, that’s where they’ll put their money.”

Of the $48.6 million in “new” revenue approved, about $40 million was truly new. The rest came from current charges that the regulators allowed to continue.

KCP&L had a similar rate request before regulators in Jefferson City for roughly half of its Missouri customers in a service area that includes most of Kansas City. That case was decided last week by the Missouri Public Service Commission, which reduced the $121 million request to $90 million, an 11.7 percent increase. That’s expected to increase average monthly residential bills by almost $12.

By the numbers

KCP&L got much of what it asked for from Kansas regulators. The average bill figures are KCP&L estimates.

Sources: Kansas Corporation Commission, KCP&L

This story was originally published September 10, 2015 at 11:33 AM with the headline "KCP&L wins a 9 percent revenue increase in Kansas."